TGB - Sector: Basic Materials---Industry: Copper

[jlong]

I have been doing research on this and other mining companys, and have noticed that a lot of companys are having problems finding tires for there big haulers, More information in this link I found.  http://www.aggregateresearch.com/extarticle.asp?id=6712  . Was wondering if anyone could come up with something that may benifit from this problem. So far all i've found is goodyear tire (GT). It looks like it is ready for a big correction- or not. any opinions?

[David Randolph]

Quite interesting article jlong 

To know who benefits mostly from the current shortage in giant tires we would need to know, from each tire maker, what's their capacity or plans to produce these tires and when. It looks like the world's largest tire maker is opening a new factory in Brazil to meet the demand for these huge 7 ton tires.

Anyway, considering mining companies, if they can't mine as much as they should the metal prices will continue to increase at a fast pace, so revenues and earnings will probably grow anyway, even if production doesn't.

I think Michael is right when he says mining companies shouldn't be bought for long term purposes, because longer term mining capacity will increase too much, so supply will grow to a high level. If demand, for one reason or another, falters, these commodity prices will collapse, as mining companies share prices.

But, as I said before, the bull market in commodities, which is about 3 years old, may last 10 or 15 years 

TGB is one of the cheapest mining companies around, with $6.7M in profits over the last quarter. The earnings multiple is about 7 and the product the company sells, copper (and "moly" on a smaller scale), has a long term ascending trend.

Technically the stock made a washout of weak hands yesterday, breaking the $1.7 support on an intraday basis, but not on a closing basis. Volume is high and investor interest is turning to these copper plays. I want to make a comparison between TGB and other big copper mining companies. Possibly I'll buy some more copper plays.

I'll continue holding TGB for the long term (but not very long term, as I agree with Michael, mining is a highly cyclical industry, with supply growth somewhere in the future supply may outstrip demand, but that can be 10 years from now).

[David Randolph]

I read on a mining company website that Molybdenum prices increased 1000% since 2002 

I think this metal isn't traded on any futures exchange, so companies organize themselves in websites like this: Metals Place

Molybdenum represents just 12.35% of TGB's sales, but I'm interested on this product, since we know so little about it. The average selling price per pound of molybdenum at TGB was $22.45, where as for copper it was $1.86, or twelve times less. Any information you might find on "moly" is welcome

Anyway, over the 4th quarter the average copper price was $1.86, and now it is trading at $2.19. So, if the company can translate the rise in the copper price to a rise in profits (probably there will be even higher growth in profits, as costs don't rise as much as revenues), the company will earn about 7 cents in EPS on the current quarter, so the earnings multiple is about 6.8 or less.

As I was reading the earnings report, I found another interesting information:

«Subsequent to the end of the quarter Taseko was approved, subject to final normal course documentation, to move to the TSX Exchange (formerly the Toronto Stock Exchange) from the TSX Venture Exchange. It is expected that the Company will begin trading on the TSX Exchange during the week of February 20, 2006.»

Is there any Canadian here, who can explain the main differences between the TSX and the TSX Venture exchanges? (thanks  ). Probably it is something like the difference between the AMEX and the NYSE, what do you think? Will this positive development help the stock this week? I don't know, but it won't do any harm ...

After a 38.2% retracement that looked like TGB was going to $0 for people holding the stock, TGB seems ready to push higher and make new highs above $2.07.

I believe TGB and EZM are sound commodity related plays that will bring nice profits to 3 Stocks on Fire Portfolios. It will be hard to shake me out of this, I can at least guarantee you that.

[Terliso]

Molybdenum:

Molybdenum (often referred to as "Moly") is an important metal in both the industrial world and our daily lives. It was found to be a distinct element by Carl Wilhelm Scheele in 1778 but retained its name from the Greek word 'molybdos' or lead-like. In its pure state, molybdenum is a lustrous grey metal, somewhat heavier than iron but melting at a much higher temperature – 4730 degrees Fahrenheit as compared with 2795 degrees Fahrenheit for iron.

Holy Moly!! Interesting Metal.. never heard it before in my life

Check this out very interesting site:
**How Is Molybdenum Used?
**What Does Molybdenum Do?
http://www.climaxmolybdenum.com/Products/WhatIsMolybdenum/WhatDoesMolybdenumDo.htm

[422fwhp]

I have a small tub of it in my garage    in grease form. It's similiar to wheel-bearing grease but almost black in color...good stuff.

One of it's uses is to lubricate suspension bushings on automobiles.

[1reilly]

David
BI Research was out with an update today. These are my comments reflecting on his commentary. 1. Co. posted .06 cents EPS despite processing low grade ore with lower recovery rates and $1.88 for their copper. 2. Co. does not believe it will report any taxes for 06 and perhaps 07. 3. He raises est. from .32 cents taxed to .45 cents untaxed. 4. Co. loaded every ounce of concentrate in its warehouse on ship headed to China on Feb 6th and he believes they were paid $2.15. 5. He's looking for 62 mil lbs of copper production in 06 and 74 mil lbs in 07.
NONE of these projections include Prosperity. The 1999 feasibility study showed 2.3 bil lbs of copper and 6.7 mil oz of gold with a 20 yr mine life. One of the biggest in No Amer. He will not assign real numbers to future earnings but anyone can multiply the Cu prospects and the gold prospects X even 50% of current price and divide it by 112 million shares (FD) to get some future EPS.
Still rates the stock a buy. Hope this helps. This service is fundamental in its approach and has a longer term outlook.

[David Randolph]

Thanks for the information on «moly» and that piece of research from 1reilly 

3. He raises est. from .32 cents taxed to .45 cents untaxed.

If there are no taxes as that analyst expects, with 45 cents a share in EPS, TGB has an earnings multiple of 4.4. I think this is unsustainable for long and TGB's stock price should at least double from current levels, and it would still be cheap.

5. He's looking for 62 mil lbs of copper production in 06 and 74 mil lbs in 07.

Copper production in 05 was 54.8 million pounds, so the analyst expects 13% growth in 06 and 19% growth in production for 07. Quite positive outlook.

NONE of these projections include Prosperity. The 1999 feasibility study showed 2.3 bil lbs of copper and 6.7 mil oz of gold with a 20 yr mine life. One of the biggest in No Amer. He will not assign real numbers to future earnings but anyone can multiply the Cu prospects and the gold prospects X even 50% of current price and divide it by 112 million shares (FD) to get some future EPS.

We could do that, but we don't need it for now. Let's wait some more to see how the project develops, no doubt this is the right time to open that mine.

TGB is extremely undervalued and after a steep correction I expect the stock to break $2 and $2.10 on the upside, nevermind the gap or what seems to be a resistance level.

A close friend of mine, at a time in his life, spent some months developing a technical analysis theory solely based on volume. For some time his calls were always accurate, it was really impressive. His theory said something like this: «when a stock approaches a resistance level on the chart, volume must increase. If volume does not increase, it is because that level isn't really a resistance, and prices will continue to climb for the short term»

Now look at the chart below. We have the resistance line, but volume was lower today ... his theory claims that, although buyers still lack the courage to take prices much higher, there is less selling pressure this time. Ultimately bulls will win this battle around $2 and take the stock significantly higher, perhaps to a level around $2.07-$1.6 = $0.47 + $2.07 = $2.54

I'll continue holding TGB.

[David Randolph]

Funny how TGB was able to close the gap at $1.92 on yesterday's session and still managed to close at $1.96. The gap is closed and the stock is fighting with the $2 resistance level. If my friend's theory is valid enough, we'll soon see a bullish breakout of $2.

Copper prices also have a bullish setup and probably will make new highs soon.

I'll continue holding TGB on the trading portfolio.

[David Randolph]

Copper opened lower, rallied, and then came back down to close near the lows. That leaves a Gravestone doji on the chart, which, according to literature, is more bullish than bearish. It allows a stock (or in this case, commodity), to push higher after a positive open, as it opens on the upper shadow of the candlestick.

Will copper open higher today? I don't know, lost my CNBC cable connection yesterday (the strong wind took the antenna down, oh my).

TGB is just holding near the top. If the trend continues, and trends usually do that, the stock will break out of all this zone with a powerfull white marubozu. I have little doubts that will be the outcome and I'll continue holding TGB.

[David Randolph]

Copper made a nice rebound yesterday. TGB is one of the cheapest stocks in the market considering the earnings multiple. I believe the bull market in copper will continue (perhaps for 5 or 10 years more), and TGB will be a huge gainer.

Well, this is all long term bullshit (can I say this?  I understand it's not a serious thing, since I'm always seing it in the movies ...)

For the short term, we have another gravestone doji and some doji will be «low doji». Volume increased a bit.

It's interesting how TGB's chart perfectly mirrors the copper chart. We'll see what happens next, I'll continue holding TGB, both on a trading and investment perspective.

[Melf Elf]

David,

I don't know if you or anyone else would be interested, but DROOY looks like it could be a nice long-term play on this successful breakout re-test, as long as 1.21, the low the Right Shoulder/Symmetrical Triangle holds.

Here's a re-post my analysis from the DROOY folder on the Previous 3SOF Picks Board:

Dhiraj.

I don't know if you're still interested in DROOY, but I'd say it has a good chance of going up at least 100% by mid-2007.

DROOY showed up as my first Metastock Explorer Wolfe Wave on February 16.  I ignored it because I didn't see how that could be a Wolfe Wave.  I still don't.

Yesterday morning, I decided to study the chart anyway.  Here's my take:

1. December 29, DROOY not only broke out above a Symmetrical Triangle, putting 1.95 IN PLAY, it also took out a year-long down-sloping neckline of a big Inverse H&S Bottom, putting 3.10 IN PLAY.

2. The 1.95 target MADE on January 20.

3. Recently, DROOY has been re-testing the neckline breakout (red down-sloping line), and has been holding.

Looks good. 

I bought it yesterday at 1.44.

DROOY was at BID 1.48...ASK 1.49 when I started this post.  It's now BID 1.54...ASK 1.55.
That's good.  The print of 1.55 takes out the February 21 high of 1.54.

Good luck if you're still holding DROOY.

[David Randolph]

Nice rally on TGB and Copper yesterday 

I'm expecting TGB to cross that resistance line soon. Today it stands at $1.93.

I'll continue holding TGB, both on a trading and investment perspective.

[David Randolph]

People are losing patience on TGB, which is exactly what we want for a bullish breakout of the $2 area.

There's nothing else to do but to keep on waiting for that bullish breakout. Fundamentals deserve it.

[David Randolph]

The consolidation phase continues on TGB. Perhaps it is waiting to touch the 50 day moving average before continuing its bullish trend. Stocks often do that.

I'll continue holding TGB.

[David Randolph]

I changed my mind  The company says this on its letter to shareholders:

«B.     
Special Matters:
 
1.        

Increase to Authorized Capital of Common Shares – To consider and if thought fit, approve an ordinary resolution to alter the Company's Notice of Articles to provide for an unlimited number of Common Shares without par value.
     
2.          

Alteration of Authorized Capital to Create Preferred Shares – To consider and if thought fit, approve an ordinary resolution to alter the Notice of Articles to create a new class of Preferred Shares, without a maximum authorized number, issuable in series, with special rights and restrictions applicable to the class which permit the directors to affix specific rights and restrictions to each series if, as and when issued.
     
3.        

New Articles of Incorporation – If the Preferred Shares are approved, to consider and if thought fit, approve by special resolution the replacement of the Company's Articles by new Articles to reflect the Preferred Shares class rights and restrictions and certain other matters described herein.»

There's nothing worse they could do ... this management makes me sick (OK, I was already sick, but this makes me mad).

This news means nobody will have control on the number of outstanding shares. The stock can go down to $0.10 and still have a larger market cap than the current market cap. Without a doubt, management seeks to dilute common shareholder value.

I'll sell TGB today, both on a trading and investment perspective